FDI and Economic Growth: Does WTO Accession and Law Matter Play Important Role in Attracting FDI? The Case of Viet Nam

Nguyen Dinh Chien, Zhang Ke Zhong, Tran Thi Giang

Abstract

This study focused on the impact of FDI on economic growth in the entire of Vietnam and in the provinces which are ranked differently on socio - economic conditions. Based on a panel dataset of 64 provinces and cities in Vietnam and used the fixed - effects estimation method for econometric models, the empirical results show that FDI has a positive impact on economic growth of Vietnam in the period 2000 - 2010. This effect in the provinces with better socio - economic conditions was stronger than in the provinces with worse socio- economic conditions. Promulgating Unified Enterprises and amending Investment Law in 2005 as well as accessing to WTO in 2007 have affected positively in attracting FDI in the period 2006 - 2010. However Law factor has a more positive and stronger impact on FDI attraction of Vietnam than WTO accession. In addition, the study examines the impact of FDI on economic growth by different regions in Vietnam. The results show that FDI has a positive impact on economic growth only exists in 4 of 6 regions of Vietnam in the period 2000 - 2010.

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